SmartSTART Series: Start-up Basics
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SmartSTART Series: Start-up Basics. Experienced executive volunteers Seminars and workshops Free Mentoring In person Via e-mail Nationally: www.score.org East Bay SCORE In person at several locations Web: eastbayscore.org. About SCORE. East Bay SCORE. 48 experienced counselors

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SmartSTART Series: Start-up Basics

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Smartstart series start up basics

SmartSTART Series: Start-up Basics


Smartstart series start up basics

Experienced executive volunteers

Seminars and workshops

Free Mentoring

In person

Via e-mail

Nationally: www.score.org

East Bay SCORE

In person at several locations

Web: eastbayscore.org

About SCORE


Smartstart series start up basics

East Bay SCORE

  • 48 experienced counselors

  • Serving: Alameda, Contra Costa & Solano Counties

  • E-mail: [email protected]

  • Located at:

    492 9th St. ,Ste. 350

    Oakland, CA 94607

    T: 510-273-6611

    Mentoring Locations: see your handout


Smartstart series start up basics

Start-up Myths

Entrepreneurial Skills

Different Paths to Owning your Business

Marketing & Selling

Organization, Legal Structure, Insurance, Regulations

Funding and Cash Management

Business Plan

Next Steps

Agenda


Smartstart series start up basics

Your SCORE Mentors today:

Laszlo G. Bonnyay

Sylvia Cunningham

Gene Page

Antonio Rodrigues

James Clark

Briefly tell us a bit about you:

Your name

Your Business idea (s)

What you want to learn today

Nice to Meet You!


Smartstart series start up basics

Start-up Myths


Smartstart series start up basics

Myth: All I need is a good idea to be a successful entrepreneur.

Myth #1

Reality: A good idea is a great start, but it takes hard work, research, and planning plus successful plan execution to turn your idea into a profitable enterprise.


Smartstart series start up basics

Myth #2

Myth: If you go out on your own, you won’t have to work so hard or such long hours.

Reality: You’ll probably work harder and longer than you’ve ever worked before, but you might enjoy it more. Exhaustion fades at the moment you proudly say, “I did this!”


Smartstart series start up basics

Myth: You’ll be able to deduct everything so you don’t have to pay taxes.

Myth #3

Reality: You will pay taxes (income, sales, property, licenses, etc.)

Income taxes are based on your revenue less all business related expenses (“net” income).


Smartstart series start up basics

Myth: If you work independently, you won’t have to report to a boss.

Myth #4

Reality: You don’t have a single boss, you have many: your clients and customers, your suppliers, city officials, etc. They each have specific needs and requirements. Your challenge is to keep all of them satisfied.


Smartstart series start up basics

Myth: Business owners get to do the work they want to do and only what they find interesting.

Myth #5

Reality: Think again. You will have to wear many hats and juggle many skills, some of which may bore you or be downright challenging.


Smartstart series start up basics

Myth: If you choose to be self-employed, you’ll be limited in what you can achieve, since you’ll be working alone.

Myth #6

Reality: There will be limitations but also plenty of opportunities. Be realistic, but don’t trap yourself with self-imposed limitations.


Smartstart series start up basics

True or False:

Ninety percent of new businesses fail within the first four years?

Or maybe it’s 80%? Or 70%?

The Big Myth


Smartstart series start up basics

Reality: Business Success

Percent of New Businesses after Four Years

(Source: SBA)


Smartstart series start up basics

Sufficient capital (including working capital and reserves)

Ability to lead and manage multiple tasks.

Knowledge of and experience in the industry (Customers, competitors, opportunities)

Discipline…and flexibility

Willingness to learn from others

Critical Success Factors


Smartstart series start up basics

Entrepreneurial Skills and Critical

Functions


Smartstart series start up basics

A leader, a self-starter

Driven, decisive

Focused, flexible

Determined, Persistent

Disciplined, Organized

Resourceful, Responsible

Healthy

Supportive family

The Entrepreneur


Smartstart series start up basics

Is an Entrepreneur

Is the Leader/Strategist

Principal Marketer

Number One Salesman

Is the Chief Customer Advocate

The Owner/Founder


Smartstart series start up basics

Different Ways to

Go into Business


Smartstart series start up basics

Not hampered by previous image or technologies

Can choose location, name, logo, relationships

Can explore new markets and directions

See your dreams come true

No base, must build all new

Greater risk

No track record = difficulty in financing

See your dream become a nightmare

Start a New Business

ADVANTAGES

DISADVANTAGES


Smartstart series start up basics

Established clientele, suppliers, location

Known quantity, proven formula/name

Help in starting and running business

Can review records

Easier to obtain financing

Potential hidden issues: debts, poor reputation, loyalty to owner, out-of-date inventory or transfer issues

Valuation of the business

No guarantee that success will continue

No guarantee the business can be improved

Buy a Business

ADVANTAGES

DISADVANTAGES


Smartstart series start up basics

Proven image and product/service

Marketing/Sales power

Limited experience

Training, professional guidance

Continued consulting relationship

Access to other franchisees for help

Limited control – not full freedom to act

Franchise = royalty and other fees

Operational boundaries and limited choices

Binding contract

Franchisor problems are your problems

Buy a Franchise

ADVANTAGES

DISADVANTAGES


Smartstart series start up basics

Allows operation in a not-for-profit status – no owners

May qualify for government or foundation grants

Protection from liability for directors and employees

Can pay salaries to employees and consulting fees for contractors

Focus on educational or charitable purposes and cannot profit those who created the organization

All profits remain within the organization

Must apply and qualify for 501c3 status or sales tax exemption

Form a Non-Profit Corporation

ADVANTAGES

DISADVANTAGES


Smartstart series start up basics

Convenient work location

Less expensive

Flexible schedule

Tax Advantages** - Sq Ft of total home - Percentage of utilities

Zoning or deed restrictions

Isolation from others

Difficult financing

Family distractions

IRS scrutiny

Home-Based Business

ADVANTAGES

DISADVANTAGES


Smartstart series start up basics

On-line Business

ADVANTAGES

DISADVANTAGES

  • Low conversion rates

  • Low barriers to entry = higher competition

  • Visitor expectations

  • No personal contact, so more limited sensory info

  • Lower startup costs

  • Expanded geographic reach

  • Convenience & accessibility

  • Flexibility


Smartstart series start up basics

Let’s Take a break


Smartstart series start up basics

Marketing


Smartstart series start up basics

Marketing

  • Actions taken to create and fulfill a demand for a product or service.

  • Commonly described as actions involving Product (or Service), Placement, Promotion, and Pricing

  • Also described as anything you do to get and keep a customer

  • Helps to communicate your desired business image.


The marketing mix

The Marketing Mix


Smartstart series start up basics

Market Position-Your Value Proposition

  • What do customers value?

    • Convenience/Accessibility

    • Service

    • Quality

    • Reliability

  • How much will they pay?

  • How broad is the market?

  • What’s the competition?

    • Number of competitors

    • Basis of competition


Smartstart series start up basics

Product offering

Functionality

Quality

Service offering

Competence

Convenience

Combined offerings

Advantages

Unique features

Other benefits?

Product and/or Service


Smartstart series start up basics

Placement

  • Part of the process to fulfill customer expectations

  • May involve partners or allies

  • Must be convenient

  • Includes sales outlets, direct shipment, service centers

  • Stores, merchandising are key

  • The web site may be the store for an on-line business

  • Supply chain definition carefully considered


Smartstart series start up basics

To Achieve

Name recognition

Brand image

Brand identity

Through

Public Relations

Action Incentives

Selling

Advertising

Promotion


Smartstart series start up basics

Price

Competition

Consumer reaction

Direct Cost

Total cost to serve

Bundling

Unbundling

Credit terms and discounts


Smartstart series start up basics

Size of operation and number of employees

Price and quality

Services provided

Reputation: strengths and weaknesses

Personal visits and observations

Suppliers & contractors

Other businesses in area

Know the Competition


Smartstart series start up basics

Identifying Prospects

Qualifying Prospects

Making Initial Contact

Educating

Making presentations

Persuading

Showing advantages

Preparing offerings

Closing deals

Selling


Smartstart series start up basics

Please complete the

“Business Concept Feasibility Assessment”

in your handout


Smartstart series start up basics

Details, Details:

Legal Forms, Insurance, Regulations, Advisors


Smartstart series start up basics

Sole proprietorship

Easiest

Suitable for most start-ups

Partnerships

Require careful preparation

MUST have formal agreement,

Limited Liability Company

MUST have formal agreement

Easy to create and maintain

Corporation (C or S)

Require more administration

Offer limited liability

Business Organization Forms


Smartstart series start up basics

Property Casualty

General Liability

Errors and Omissions

Product Liability

Umbrella Liability

Worker’s Compensation

Employee Group Health

Life (Key employee, partners)

Business Interruption

Insurance Considerations


Smartstart series start up basics

Licenses and approvals

Operating license

Local regulations

Fictitious names

Federal and State Labor Laws

OSHA

ADA

Immigration Laws

Income Tax Withholding

Social Security Payments

Sales Tax Collections and Payments

Government Regulations


Smartstart series start up basics

Banker

Lawyer

Accountant

Insurance Agent

A “Sounding Board”

SCORE Mentor

Board of Advisors

Business Mentor

Board of Directors

Every Owner Needs Support:


Smartstart series start up basics

Funding and Cash Management


Smartstart series start up basics

Present or anticipated cost of living

Any income not from business

Outstanding debt

Amount in savings

Funds from Investors (e.g. friends and family)

Credit History

Assets for Collateral

Personal Financial Condition


Smartstart series start up basics

Essential Considerations:

Tools and equipment

Leasehold improvements

Licenses and permits

Professional fees

Initial inventory

Working capital reserve fund

(Six to Twelve Months of Total

Operating Expenses)

Start-up Funding Needs


Smartstart series start up basics

Salaries

Rent

Insurance

Taxes and fees

Advertising

Loan interest/ principal

Utilities

Maintenance

Operating Costs


Smartstart series start up basics

Equity

Signifies Ownership

Sources of Capital

Debt

Does NOT Signify Ownership

  • Personal savings

  • Family and friends

  • Partners’ contributions

  • Profits retained in the business

  • Banks and credit unions*

  • Community Express

  • Micro Loans*

  • Peer-to-peer lending

  • Credit cards (not recommended)* Can be guaranteed by SBA


Smartstart series start up basics

Lender’s View of Borrower

  • Character, Commitment

  • Credit rating

  • Cash flow

  • Collateral, Capital

  • Industry knowledge

  • Personal investment

  • Financial history

  • Financial projections

  • Management skills

  • Competition


Smartstart series start up basics

Open a separate bank account for your business ASAP

Deposit all receipts “intact”

Use a petty cash fund

Separate sales tax receipts on your books

Hang on to cash as long as possible

Reconcile bank account monthly

Cash: Most Important Asset


Smartstart series start up basics

Business and Marketing Plans


Smartstart series start up basics

Encourages an objective view

Becomes foundation for planning

Powerful management tool

Communicates owner’s ideas

Business Plan Importance


Smartstart series start up basics

Table of Contents

Executive Summary

Section One: The Business

Section Two:

Marketing

Section Three:

Financial Forecasts

Section Four: Supporting Data

Business Plan Contents


Smartstart series start up basics

Brief description of the business

How much money needed

How the money will be used

Whether you will seek a loan or investors

When you will repay loans

Executive Summary


Smartstart series start up basics

Description of business

Product or service

Market need

Location

Competition

Management and personnel

Use of new funds

Section 1: Business Summary


Smartstart series start up basics

Target market: Is it large enough to be profitable?

How is your product or service different/better?

How is the market reached?

Costs involved?

Required pricing to make a profit?

Who are your competitors and where are they located?

Section 2 - Marketing Plan


Smartstart series start up basics

Data you need is most likely available - the trick is to dig and find it!

Chambers of Commerce

Banks

Civic Organizations

Census Data

Internet

Libraries

Trade Associations

Market Plan Data Sources


Smartstart series start up basics

Capital equipment list

Income and expenses

Assets, liabilities & equity

Sources & applications of funds (cash flow)

Break-even calculation

Historical records (including variation analysis)

Section 3: Financial Forecasts


Smartstart series start up basics

Next Steps


Smartstart series start up basics

Now What?

  • If you’re not yet ready, consider deferring your decision about going into business for yourself; at least for now.

  • If you think you are ready to investigate more, write a description of your proposed business

    • Why do you want to be in business: What do you expect from it?

    • What is the scope of your business –

    • What is your business proposition –

    • What do you value in life – How does it apply to your business?

  • Study the feasibility of one or more business ideas and start work on a business plan

  • Get into the SmartSTART Program – meet with a mentor


Smartstart series start up basics

“The best way to predict the future is to create it.”

- Peter Drucker

Are you ready to create your future? Would you like support with taking the next step in starting your own successful business?

Sign-up for SmartSTART Series

Sign-up for the Remaining Workshops!


Smartstart series start up basics

Start-up Basics

Business Concept

Marketing Plan

Financial Projections

Funding Sources & Next Steps

SmartSTART Series

Testing Your Business Ideas

a

Session 1

Session 2

Session 3

Session 4

Session 5


Smartstart series start up basics

Handout:

free CD for

Sessions II-V

62


Table of contents

Table of Contents


Smartstart series start up basics

SmartSTART Series

Cal State CenterSan Ramon

Thu. Feb. 3 Sat. Feb. 12

Thu. Feb. 17 Sat. Feb 26

Thu. Mar. 3 Sat. Mar. 12

Thu. Mar. 17 Sat. Mar. 26

Session 2

Session 3

Session 4

Session 5


Smartstart series start up basics

Process Roadmap

PERSONAL MENTORING

Session 1:

Start-up Basics

Session 2:

Business Concept

Session 3:

Marketing Plan

Session 4:

Financial Projections

Session 5:

Funding Sources

“GO OR NO GO” DECISION & NEXT STEPS


Smartstart series start up basics

Locations & Sign-Up

Cal State Center

1000 Broadway

Suite 109

Oakland, CA 94067

San Ramon

San Ramon Community Center

12501 Alcosta Boulevard

San Ramon, CA 94583

Sign-up at www.eastbayscore.com

or call 510-273-6611


Smartstart series start up basics

Help Us Help You

Please Answer the Following Questions:

  • On a scale of 0 - 10, how likely is it that you would recommend this workshop to your friends and colleagues?

  • What is the primary reason for the answer you just gave us?

  • What is the most important improvement that would make you rate us closer to a 10?


Score east bay

SCORE East Bay

Thank You

&

Good Luck


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